NNPC, DPR Heading for a Showdown over Petrol Consumption, Subsidy Figures

• As NNPC says Nigerians consume more petrol during scarcity
• Corporation claims subsidy on supply not consumption
• Collected N88.91bn as subsidy in May, as DPR doubts figures

Tobi Soniyi

The Nigerian National Petroleum Corporation and the Department of Petroleum Resources might be heading for a showdown over the actual litres of refined petrol the nation consumes daily.

In the middle of the disagreement was the Nigerian Governors’ Forum (NGF), which accused the NNPC of reporting excessive petrol consumption figure to facilitate deduction of undue petrol cost (under-recovery) from domestic crude cost.

This, the governors reckoned, explained the shortfall in what NNPC remits to the Federation Account, noting that its allegation was based on the disclosure made to it by the DPR.

But NNPC was unhappy that DPR provided information that contradicted its position to a third party.

The DPR had told the NGF that petrol under-recovery was derived from consumption or evacuation whereas NNPC claimed that PMS cost under-recovery was derived from actual import volumes.

A governor, who was privy to some of the exchanges between the NNPC, the DPR, the Minister for Finance, Kemi Adeosun, and the Presidency on the issue, said like the DPR, the governors had evidence to prove that NNPC was under-reporting.

For some weeks now, FAAC has not been able to conclusively hold its meetings, because of claims by the NGF that the NNPC was shortchanging the federation with exorbitant financial claims as subsidy over volumes of petrol it imports into the country.

The governors had called for an audit of NNPC’s petrol importation, claiming daily petrol consumption figures reported by the NNPC were overblown by the corporation so it could keep more money away from FAAC.

In a letter by NNPC’s Group Managing Director, Dr. Maikanti Baru, to Adeosun, which the governor allowed our correspondent to sight, the corporation said: “The minister is kindly invited to note that PMS cost under-recovery is derived from actual import volumes and not on consumption or evacuations as presented to the NGF by the Department of Petroleum Resources.

“We would like to bring to the attention of the minister, the assertion of the NGF that the NNPC is reporting excessive PMS consumption figures to facilitate deduction of undue PMS cost under-recovery from domestic crude cost.

“The position was further exacerbated by the DPR’s claim that there was never a time where PMS Truck Out (Evacuation) reached 60 million litres per day and that evacuation was the basis in which PMS daily average consumption is made.

“Additionally, the PPPRA evacuation data since January 2016 indicated average volume of 50 million litres per day.”

The letter was dated July 5th.

Hhowever, the letter appeared to be an effort by the corporation to explain its position on the June 2018 revenue remittance to FAAC, which has remained controversial till date, the letter suggested the DPR was suspicious of the volumes of petrol the NNPC frequently claimed to have imported and based its subsidy deductions on.

NNPC insisted that PMS cost under-recovery was based on supply and not evacuation or consumption and therefore accused the DPR of bad faith.

Even though the NNPC chief admitted that the corporation did not have an accurate data on the volume of petrol required by Nigeria on a daily basis and may have been importing petrol with figures the PPPRA handed to it, he was of the view that the DPR divulging such information to the NGF without confirming with it was aimed at embarrassing the federal government.

He said: “NNPC observes that the submission by the DPR was not well intentioned as they should have appropriately discussed and gotten alignment or explanations from PPPRA and NNPC before divulging to third parties. This should be guided upon to avoid embarrassing the government.”

Specifically, Baru insinuated it was probably the DPR that told the NGF that the petrol importation figures frequently claimed by the NNPC were not trustworthy.

But the NNPC, at a point, admitted that it did not know the actual petrol the nation consumes daily.

He said: “Honourable minister would recall the ongoing engagement by the inter-ministerial team composing Ministries of Petroleum and Finance with the participation of the NNPC, DPR, PPPRA, PEF, OAGF and the CBN to put in place a monitoring system for the entire fuel supply and distribution system in the federation.

“Also, the Ministry of Petroleum Resources is engaging the National Bureau of Statistics to establish actual consumption of petroleum products in the country. The outcome of these exercises may establish the actual fuel consumption in the country.”

NNPC said it had previously utilised 35 million litres per day as basis for supplying its shares of the national consumption.

The corporation also faulted the data provided by the DPR saying the figures might not be fully reflective of the actual evacuation figures from the various depots.

Baru alleged that the DPR failed to confer with the NNPC and the Petroleum Products Pricing Regulatory Agency (PPPRA) on the importation volumes before making a presentation to the NGF, adding that the NNPC charged subsidy based on the actual volumes of petrol it imports and not on consumption or evacuations from its depots.

It then added: “However, our evaluation of the PPPRA evacuation data for all depots and terminals from January 2016 to December 2017 indicated average load out of about 48 million and 50 million per day respectively.”

In the same letter, Baru disclosed that the corporation made deductions worth N88.91 billion as subsidy claims for May 2018 and part of outstanding subsidy claims for 2017.

Indicating the claims were based on the supplies figures, Baru noted that N31.12 billion was for May 2018, while N57.79 billion was claims for the 2017 outstanding.

“For the month of June 2018, NNPC proposed deductions of N88.91 billion as PMS cost under-recovery against domestic crude cost receivable in May 2018. This comprises N31.12 billion for the month of May and N57.79 billion as part of the outstanding for 2017.

“The 2017 under-recovery was not recovered due to low production and prices, which would have had adverse impact on FAAC remittance in the succeeding months.”

But to prove that NNPC was being economical with the truth, the governor also allowed THISDAY to sight an earlier letter written to the Vice-President, Prof. Yemi Osinbajo by the same NNPC GMD.

In the letter dated May 9th, 2008, Baru asked Osinbajo to prevail on the governors to accept what was remitted to the FAAC and to back off the FAAC allocation crisis.

The governor said it was incredible for NNPC to tell the Vice-President that Nigerians consumed 70 million litres per day between November and December 2017, when the nation was battling with fuel shortage.

Excerpts from the letter to Osinbajo reads: “The corporation has witnessed astronomical increase in the volume of PMS daily consumption, which has averaged 50-55 million litres per day and even reached a peak of over 70 million litres per day during the festive period of November and December 2017, and through the crises period.

“This necessitated Mr. President’s action of providing a $1.05 billion facility to NNPC to enable it import additional volumes through cash purchases to augment DSDP (average of 35 million litres per day) to meet the reserve depletion and the 50-55 million litres per day consumption.

“The corporation has, however, found succour in its ability to recover the cost differential through a back-out from the monthly remittances to FAAC based on actual volumes supplied,” the letter stated.

Rhetorically, the letter asked: “How can we be consuming 70 million litres, when there were long queue and when some people could not drive because of shortage? It simply does not make sense!”

Last Thursday, the rescheduled meeting of FAAC, again, ended in a deadlock.

The meeting was eventually suspended indefinitely.

Last Tuesday, the meeting, which was rescheduled after the initial June 27 meeting ended in a stalemate and was also put off after members failed to reconcile the records with the management of the NNPC.

Members could not agree to share the revenue brought for distribution by the NNPC.

After the Thursday meeting, Chairman of Commissioners Forum of FAAC, Mahmood Yunusa, said the meeting was postponed indefinitely and would only be reconvened after “the process is strengthened.

“The next meeting is a function of when we finish the process. What we are looking for is for the process to be strengthened. Once the process is strengthened, there is no need for this fight.”

The commissioner said the decision of the 36 state governments and other members of FAAC to reject NNPC’s paltry remittances, “is about the system and the process we are working on. Once the process is strengthened, the correct amount is supposed to go to federal revenue account.”

He said the practice of NNPC withholding revenues that should be remitted to the FAAC for distribution to the three tiers of government was being reviewed at the highest level of government.

“Mr. President will sit with all parties. He is highly interested in this matter. He is taking his time to ensure the right thing is done,” Yunusa said.

As a result of the disagreement, civil servants across the country are yet to be paid their last month’s salaries.

Already, some governors are negotiating to take loans at high interest rates to pay their workers.

Members of the committee, consisting Commissioners for Finance and Accountants General from the 36 states of the federation and Abuja, had accused the NNPC of not remitting enough revenue for sharing.

But NNPC spokesperson, Ndu Ughamadu, said the N147 billion revenue remitted to FAAC for sharing to the three tiers of government in June was “in line with the terms of agreement it had with governors on the matter.”

Ughamadu said the agreement NNPC had with the governors was for the corporation to make a monthly remittance of N112 billion only to FAAC.

He said the remittance was subject to sufficient funds from its sales of domestic crude oil allocation for the corresponding month after meeting certain operational obligations.

The spokesperson said NNPC was able to surpass the terms of agreement with the governors on the monthly remittance for June by about N35 billion.

Since then, the committee has been meeting with the top management of the NNPC, finance ministry officials, Accountant General of the Federation and representatives of the commissioners of finance to reconcile the accounts.

But on three occasions, the meetings failed to come to any agreement on what should be the correct figure as the controversy continues.